TEMPO/High Rise Tax to be Eliminated

TEMPO Interactive, Jakarta: The President's decision on High Rise Construction instructs related ministers to eliminate all kinds of tax to make a success out of construction of 1,000 towers. This program is important to overcome the problems of public housing and traffic jams in major cities, which cause inefficiency and loss of productivity.

Vice President Jusuf Kalla said the tax cut is given to the first 1,000 towers that are built. “If necessary, value-added tax (VAT) is also eliminated,” said Kalla in Jakarta yesterday (14/12). The Presidential Decision was issued on Monday (11/12).

The President also asked regional leaders to ease the licensing of high rise construction. This policy is urgent so that employees who work in the city, live in the city, not in suburbs. “It'll be more efficient if they live in the city,” said Kalla.

However, what happens is the other way around. Many wealthy people live in the city despite having vehicles. “Wealthy people should live outside the city,” said Kalla. In addition, many slums are scattered throughout the city, which actually can be overcome by building high rises.

“High rise investment is only Rp50 trillion,” he said. The World Bank is already ready to fund it. The Bank Tabungan Negara (BTN) has also promised to provide funds, up to half the funds needed to build high rises.

BTN's Director of Credit, Siswanto, previously said BTN is ready to allocate Rp1 trillion funds for high rise financing in 2007. The funds are prepared for construction credit and the remaining for high rise ownership.

According to Indonesian Real Estate (REI) General Chairperson, Lukman Purnomosidhi, developers have long been ready to build high rises. Kalla has also informed REI that high rise construction is not the only thing with incentives.

High rise consumers will also be given incentives of VAT cut and low interest rate. “The incentives for customers will be regulated in a Ministerial Decision,” he said. However, Lukman also hopes the government will provide supporting infrastructure, such as a busway feeder system, electricity and drinking water.